Morning Scan: All the big stories to get you started for the day

Kerala has finally seen the first showers of the southwest monsoon a week behind schedule, with its predicted advance over the mainland raising confidence about rural incomes and economic growth. The June-to-September monsoon, vital for irrigating 45 percent of cultivated land, is set to progress over more of peninsular India and the northeast over the next 48 hours, the India Meteorological Department said.

Why it’s important: The monsoon’s progress is keenly watched by both farmers and policymakers because it has an oversized impact on India’s rural economy and incomes. The El Nino phenomenon that leads to reduced rainfall continues to pose a worry.

#3. Indians have so far returned half of Rs 2,000 banknotes in circulation

Residents of India have so far returned around half of the Rs 2,000 notes in circulation, with 85 percent deposited in banks and the remaining exchanged by customers. On 19 May, the Reserve Bank had announced the withdrawal of the high-value notes from circulation, giving people until September 30 to deposit or exchange them. The total value of these notes in circulation was Rs 3.62 lakh crore or 10.8 percent of notes in circulation on March 31.

Why it’s important: The move to withdraw the Rs 2,000 banknotes in circulation is expected to increase liquidity, at least temporarily, and lead to a surge in bank deposits.

#4. Some 24 global brands to mark Indian entry through stores this year

About two dozen international brands, including Italian luxury fashion brand Roberto Cavalli, British luxury goods brand Dunhill, American sportswear and footwear retailer Foot Locker are in talks to enter India with their stores this year. Chains such as Lavazza and Armani Caffe of Italy, Jamba of the US and the Coffee Club from Australia are also likely to enter India this year. This is up from one global brand in 2020, three in 2021 and 11 in 2022. Before the pandemic, about 12-15 brands used to enter India every year.

Why it’s important: The entry of global brands will be the highest in at least a decade. They seem to be encouraged by a post pandemic surge in consumption among the well-off in the country.

#5. Stressed margins remain chokepoint for FMCG supply chain companies

Jiomart B2B has become the latest among organized supply chain companies to bite the bullet, shutting down warehouses and asking employees to leave. Companies are finding it hard to sustain the supply chain business primarily because gross margins in supplying FMCGs products are very low. While it looks attractive because it’s the largest part of the consumption market, the last-mile supply chain and retailer are not making money, experts said.

Why it’s important: The cost of supply chains is disproportionately high in rural market due to lower volumes. A demand resurgence could lead to better numbers and destress warehousing and supply.

#6. Four states race past 10 percent adoption of electric two-wheelers

Four Indian states have breached the 10 percent mark in electric two-wheeler penetration, according to latest Vahan Dashboard data. Goa leads the way with 17.20 percent, although with modest numbers, followed by Kerala (13.66 percent) and Karnataka (12.19 percent). Maharashtra, with an adoption rate of 10.74 percent, is the largest state in the number of electric two-wheelers sold. In 2019, no state had more than 1 percent penetration.

Why it’s important: It is widely believed that the domestic market for electric two-wheelers may have breached an inflexion point. The recent removal of significant subsidies could slam the brakes on that.

#7. Legal battle with lenders in the US may stymie fundraising efforts by Byju’s

The legal battle between Byju’s and US lenders on the edtech unicorn’s $1.2 billion term loan is expected to adversely affect its fund raising, including debt, loan, and equity, industry experts said. It might also delay the IPO for its tutoring service subsidiary Aakash Educational Services, which is eyeing a public listing next year. Byju’s has filed a suit against US-based investment management firm Redwood, challenging the acceleration of the term loan facility and to disqualify the lender for its tactics.

Why it’s important: Byju’s missed a quarterly interest payment of about $40 million on the $1.2 billion loan, becoming the only Indian start-up to have defaulted on dollar borrowings. It would now find it harder to raise further funds from overseas investors.

#8. Tribunal accepts Delhivery’s notice wanting to declare Go First’s insolvency filing as fraudulent

The National Company Law Tribunal has accepted Delhivery’s notice seeking declaration of Go First’s voluntary insolvency resolution as fraudulent and malicious. It gave the interim resolution professional of the Wadia-group airline two weeks to reply. Under Section 65 of the bankruptcy code, fraudulent and malicious initiation of insolvency proceedings can invite a penalty of Rs 1 lakh to Rs 1 crore.

Why it’s important: Delhivery has argued that Go First received Rs 57 lakh on May 2 from the logistics firm as advance for future services despite knowing it would soon file for insolvency. Bankruptcy proceedings halt all assert and fund recovery till a resolution plan is approved.

#9. Lenders to Reliance Capital to vote on resolution plan submitted by Hinduja Group

The creditors of Reliance Capital will start voting on Friday on the resolution plan submitted by a Hinduja Group entity that offers recovery of Rs 10,000 crore. The Group’s IndusInd International Holdings submitted a detailed resolution plan earlier this week, which was presented to lenders on Wednesday. Torrent Investments, Piramal Capital and Oaktree Capital, the other bidders in the fray, did not submit detailed plans within the deadline.

Why it’s important: The expected recovery from the sale of Reliance Capital at Rs 10,090 crore would be below the liquidation value pegged at Rs 12,500-13,000 crore, implying a recovery of 43 percent.

#10. Peak XV Partners, spilt from Sequoia Capital, has dry powder worth $2.5 billion

As part of the $2.85 billion funds raised for India and Southeast Asia in 2022, Peak XV Partners have $2.5 billion of uninvested dry powder, managing director Shaliendra Singh has said. All the capital raised for India and Southeast Asia as well as Sequoia’s portfolio of 400 plus companies remains, he said. “We are very bullish on India and Southeast Asia as a market and we are going to only double down,” he said.

Why it’s important: India’s start-up ecosystem has gone into a tizzy as the marquee Sequoia Capital, which has invested in numerous enterprises in the country, spun-off its India unit in a retreat from Asia.